Dear Liza: My husband just died. Our main asset is his IRA. I just found out that my husband named our living trust as the beneficiary, not me. The guy at the brokerage account where the account is held told me that this is a big problem and that I will not be able to roll my husband’s IRA into my own IRA, but will instead have to take money out based on my husband’s age. My husband was 12 years older than I am, so this means I have to take a lot more out, sooner, than I want to, and pay taxes on it before I’m ready. Is that guy right? Oh argh. I hate it when brokerage guys scare people like that. I also hate it when clients don’t follow the instructions that their lawyers give them. (Of course, lots of lawyers don’t actually tell their clients what to do, so who knows exactly where the instructions got garbled here). So, ideally, your husband should have named you as the beneficiary for his IRA, not the trust. That would have made it easier all around. Spouses can rollover IRA’s from their spouses, and that lets them defer taking any money out until they are 70 1/2–which is exactly what you want to do. But here’s the thing: people get this step wrong a lot. And the IRS has issued rulings that say that if certain conditions are met, such as the surviving spouse being the only beneficiary of the trust during his or her lifetime, they will permit the rollover, even though it’s not exactly by the book. Here’s what you should do: go on the brokerage company’s website and search for estate services or inheritance specialists. The big companies all have special offices that help heirs deal with inherited assets. Those people know the rules and they know about this exception procedure. Give them a call and see if they will assist you in accomplishing the rollover. Forget about the first guy you spoke with. In his defense, the rules are complicated and it’s hard to keep them straight. Talk to the experts. But keep in mind that it’s up to the plan administrator to decide how this gets resolved — the IRS sets out the regulations, but companies can and do differ in what they offer to their clients.

About Liza Weiman Hanks

Liza is an attorney who specializes in estate planning for families of all ages. She is a Certified Specialist in Estate Planning, Trust, and Probate Law by the State Bar of California Board of Legal Specialization. A graduate of Stanford Law School, she has also served as an instructor at the Santa Clara University Law School and practiced with the state of California and a prestigious Silicon Valley firm. Liza is also the author of Busy Family's Guide to Estate Planning: 10 Steps to Peace of Mind. She lives with her family in Campbell, California.